PennyMac Financial Services (PFSI) Q4 2023 earnings summary

Executive summary

• Q4 net loss was $36.8M, diluted EPS was -$0.74 on revenue of $361.9M; book value per share was $70.52 vs. $71.56 at Sept. 30, 2023.

• Excluding valuation-related changes and the arbitration accrual, Q4 operating pretax income was $180.1M, annualized operating ROE was 15%, and adjusted operating net income was $131.7M.

• FY 2023 net income was $144.7M vs. $475.5M in 2022; revenue was $1.4B vs. $2.0B.

Financial highlights

• Valuation-related and non-recurring items reduced Q4 pretax income by $234.3M, or $3.25 per share; items included $370.7M of MSR fair value losses, $294.8M of hedging gains and a $158.4M arbitration accrual.

• Total expenses were $416.2M; excluding the arbitration accrual, expenses were $257.8M vs. $273.5M in Q3 and $272.7M in Q4 2022.

• Book value per share was $70.52 at Dec. 31, 2023; Q4 dividend was $0.20 per share.

Segment performance

• Production pretax income was $39.4M vs. $25.2M in Q3 and a $9.0M loss in Q4 2022; segment revenue was $176.5M, flat QoQ and up 34% YoY.

• Loan acquisitions and originations totaled $26.7B UPB, up 6% QoQ and 16% YoY; $24.2B was for own account and $2.5B was PMT fulfillment activity.

• Servicing pretax loss was $95.5M including the arbitration accrual; adjusted pretax income excluding valuation-related and non-recurring items was $144.4M, up 20% QoQ.

• Investment Management pretax income was $1.9M vs. $0.4M in Q3; revenue was $9.7M and net AUM was $2.0B at Dec. 31, 2023.